Civil Procedure Outline

Basic Definitions/Concepts:

- Jurisdiction: A court’s power to decide a case or enter a decree. Types of Jurisdiction: 1) Subject Matter Jurisdiction: Jurisdiction over the nature of the case and the type of

relief sought.2) Personal jurisdiction: Literally, authority over a person. The power of a court to

require a defendant from outside the state to defend a lawsuit in that state. A court’s power to bring a person into its adjudicative process; jurisdiction over a defendant’s personal rights. Defendants may be subject to jurisdiction on the basis of domicile in a state, in-state service of process (tag), consent to jurisdiction, continuous or substantial in-state contacts, or as a result of “minimum contacts” with the forum state that gives rise to a particular cause of action.

- Horizontal choice of law: which state’s law applies?- Vertical Choice of Law- Removal: When a case is removed from state to federal court on the basis of subject

matter jurisdiction.

SUBJECT MATTER JURISDICTION- All states have conferred broad subject matter jurisdiction on their courts and thus state

courts can hear most types of cases. Conversely, federal courts have very limited subject matter jurisdiction.

- Sources of subject matter jurisdiction: In order for a court to have subject matter jurisdiction, they must have authority from the Constitution (Article 3, Section 2) or a statute (typically § 1331 or 1332). “Arising under” and diversity (parties from different states)

- “§1331- Federal Question: The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” Cause of action compelling the court is a federal question. Essentially, the federal judiciary has the authority to interpret and apply federal law. For federal question jurisdiction to exist, there must be authority from a) the Constitution and b) a statute. Three purposes of the statute: 1) promote uniformity of federal law; 2) encourage judicial expertise in interpreting federal law; 3) protect against possible state-court hostility to claims arising under federal law.

- Mottley (1908): Plaintiffs injured on defendant’s railroad due to the defendant’s negligence, plaintiffs and defendant entered into an agreement that the plaintiffs would ride free for life. Some years later the defendants refused to renew their passes claiming their right to do so under an act of Congress. Plaintiffs brought their claim in federal court and it was eventually appealed up to the Supreme Court, who declined to decide it, ruling that the lower court did not have jurisdiction to hear the case. The court determined that “arising under” jurisdiction can be shown only when the plaintiff’s statement of the case is based upon federal law/Constitution. An anticipated defense based on a federal statute does not create a federal question, because the original cause of action was state. From Mottley, we understand that the issue of subject matter jurisdiction can be raised at any time, from either party or the court.

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- Well-pleaded complaint rule: In order for a case to arise under federal law, the cause of action asserted by the plaintiff in the complaint must be federal. The plaintiff cannot rely on an anticipated federal defense. Thus, defenses, even those that raise a legitimate constitutional or federal question, are irrelevant when determining jurisdiction. (First articulated by Justice Marshall in Osborn, 1824.) The scope of federal jurisdiction is under the control of Congress. Congress has construed their power very narrowly under the Constitution, and the courts have read the corresponding statutes-1331 and 1332-even more broadly.

- To determine the cause of action underlying the complaint, look to: the source of law that created the cause of action and the theory the plaintiff is suing under.

- Exceptions to the well-pleaded complaint rule. All matters of state law are not automatically precluded by §1331. In Smith, a shareholder sued to enjoin a company from investing in certain bonds on the ground that the Act of Congress authorizing their issuance was unconstitutional. The cause of action was filed under Missouri law, but the court determined that: when the right to relief depends upon the construction or application of the Constitution or federal laws, and such a federal claim is not merely collateral, and rest upon reasonable foundation, the District Court has jurisdiction. Grable was an action for quiet title (wanted the state to put the title back in his land) so the plaintiff was seeking a declaratory judgment. A declaratory judgment, in accordance with §2201 is a judgment that declares the relationship between the parties. It allows a plaintiff who might otherwise be a defendant to sue. To determine a declaratory judgment, the court employs the “imaginary case” rule, in which it considers whether the court would have subject matter jurisdiction without the declaratory judgment-thus it imagine the claim that might be made by the plaintiff. (Could the plaintiff have filed the complaint in federal court without the judgment?) A declaratory judgment cannot create a federal cause of action. Here, Grable wanted the court to definitively determine who owned the land. New standard: does a state-law claim necessarily raise a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities? Smith-Grable exception: Although the cause of action is state law, if the cause itself turns on an interpretation of federal law, then a federal court has jurisdiction to hear it. There must be a significant federal issue and it must not disturb the balance of federal/state judicial responsibility in terms of the number and importance of cases that come before each court. Empire sets out an additional factor to be considered by the court: is the federal issue an issue of law (decidable by law) or an issue of fact (one that considers the interaction between the facts and the law?). In order for there to be subject matter-jurisdiction under the Smith-Grable exception, the federal issue must be one of law.

In order for the Smith-Grable exception to apply, the following must exist:

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- Abstention is the relinquishment of jurisdiction when necessary to avoid needless conflict with a state’s administration of its affairs. (Sometimes the federal court will decline to hear a case, even when it can). In Colorado River, the court determined that abstention from the exercise of federal jurisdiction should always be the exception and not the rule. It is appropriate in the following cases: in cases presenting a federal constitutional issue which might be mooted or presented in a different posture by a state court determination of pertinent state law; where difficult issues of state law bearing on policy problems of substantial public import, are raised (federal review would be disruptive); and where, absent bad faith, federal jurisdiction has been invoked for the purpose of restraining state criminal proceedings. The court should, if possible, seek to avoid duplicative litigation. Other factors to be considered: the inconvenience of the federal forum, the desirability of avoiding piecemeal litigation, and the order in which jurisdiction was obtained by the concurrent forums.

Diversity - The standard for diversity jurisdiction is set forth by the Constitution and §1332.

Diversity simply asks whether the parties in the case are from different states. If so, even though the claim of a lawsuit arose solely under state law, the federal court can hear the case. The purpose of diversity jurisdiction is to avoid discrimination against out of state residents. In Strawbridge, Chief Justice Marshall set forth the rule of complete diversity which states that there is no diversity jurisdiction if any plaintiff is a citizen of the same state as any defendant, no matter how many parties are involved in the litigation. Diversity considers the citizenship of the parties who sue, not the state where the proceedings arise. (Strawbridge facts: A California plaintiff attempted to sue both a California defendant and a South Carolina defendant in one case). As diversity has been interpreted so far, the Constitution grants broad power while the statute is narrow power.

- The amount in controversy is another requirement of diversity. There must be a minimum $75,000 in a diversity dispute for it to come before the judge.

- Domicile is a primary consideration in determining diversity. Domicile is established by birth and later by the place in which you live (if there is no fixed date for your departure from that state). Where are corporations domiciled? (See §1332 (c)).

Supplemental Jurisdiction- What rules apply when the plaintiff attaches a claim containing a federal issue to one that

does not contain such a claim? Or, when a plaintiff or defendant, inserts a claim lacking an independent basis for federal jurisdiction by way of a counterclaim, cross-claim, or third-party complaint? Supplemental jurisdiction allows a federal court to hear a case that has a federal claim, for which they would have original jurisdiction, and a state claim,

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1. The state law cause of action must have a fundamentally federal foundation (must depend on the construction/application of federal law.

2. Must involve a significant question of federal law(significant to the administration of law in the country/must have a strong federal interest)

3. The question must be one of law not fact.4. Court has to be able to maintain the

state/fed balance

over which there is no independent basis for federal jurisdiction but that derives from the same common nucleus of operative fact (Gibbs).

- Cross-claim: When parties on the same side sue each other. If a defendant files a new lawsuit in the same litigation, the sued party is the third party defendant while the suing party is the third party plaintiff. §1367 controls supplemental jurisdiction.

- In Gibbs, the union put a “freeze out” on Gibbs saying that they would not work with him and as a result Gibbs was fired. (Controversy included use of armed mob to prevent opening of the mine.) Gibbs the international branch of the union under a federal law claim (violation of Labor Relations Act) and a state law claim (tortious interference with contractual employment/conspiracy). In order for a federal court to hear a claim under such a circumstance, the relationship between the state and law claims must be substantial, the federal claim must have substance sufficient to confer subject matter jurisdiction, and the state and federal claims must derive from a common nucleus of operative fact (from same transaction or occurrence). If the claims, when considered without their state or federal character, are such that the plaintiff would be expected to try them all in one judicial proceeding, then there is power of the federal court to hear it. (This ruling rejects the Hurn court, who ruled that the federal and state cause of action had to protect the same right.) The court can use discretion when determining which claim is predominant, how far the case has gone, and the likelihood of jury confusion. If the federal case is dismissed, the state case should be dismissed as well. Thus, courts have both power and discretion when dealing with supplemental law claims. The justification for this type of jurisdiction lies in considerations of economy, convenience, and fairness to litigants. The discretion is such that a district court may decline to exercise supplemental jurisdiction if: “the claim raises a complex issue of state law, the claim substantially predominates over the claim or claims over which the district court has original jurisdiction, the district court has dismissed all claims over which it has original jurisdiction, or there are other compelling reasons for declining jurisdiction.” §1367. In other words, Gibbs give courts the power to hear supplemental claims but has the discretion to refuse to hear it.

- The “anchoring claim” is the claim that would originally confer subject matter jurisdiction. A supplemental or pendent claim is an additional claim for which the court would not ordinarily have jurisdiction, were it not attached to the anchoring claim. Pendent party jurisdiction is jurisdiction in which a plaintiff attempts to bring in another defendant under a state law claim. In Aldinger, the court declined to extend supplemental jurisdiction over a third party plaintiff (because federal courts have limited jurisdiction). Owen considered a case in which one of the asserted claims was within the district court’s diversity jurisdiction and the other was not. P1 D1 under a state claim, but filed in federal court under diversity. D1 Third Party Defendant (TPD) under a federal claim. P1 then sues TPD under a state claim, but remains in federal court on her belief that there is diversity, however it is later discovered that there is not (TPD turns out to be incorporated in the same state as the plaintiff). Additionally, D1 was granted summary judgment, leaving TPD as the sole defendant. The court determined that in such a case, when a party attempts to add a non-diverse third party when the reason for coming into federal court originally was diversity, it will be dismissed to avoid circumventing Strawbridge (complete diversity requirement). In Finley, Original claim is one in which the federal court has exclusive jurisdiction. The other claim was a state law claim against

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a non-diverse (new) defendant. With the addition of a new party, as opposed to an addition of claims, the court refuses to assume that they have constitutional power, congressionally authorized, to have jurisdiction over that new (pendent) party. Scalia dissented on the grounds that Aldinger articulated a distinction when the anchoring claim was one of exclusive federal jurisdiction. This issue led Congress to intervene to create §1367, which states that supplemental jurisdiction is provided if the non-anchoring claim arises from the same action except when this would contradict or make inconsistent §1332 (diversity). Thus, Owen remains good law and Finley is not.

Does the Court have supplemental jurisdiction? (Arising Under v. Diversity is reason for coming to court)

Arising Under Diversity

New Claim

New Party

- §1367 (c) requires the court to determine if the consideration of the Gibbs values (economy, convenience, fairness, and comity) provide compelling reasons for remand, but also articulates that circumstances warranting declining jurisdiction are exceptional. In Executive Systems, the court read this provision to mean that unless a court can invoke a 1367 c category in exercising its discretion to decline to entertain pendent claims, supplemental jurisdiction must be asserted.

- In Guaranteed Systems, a third party defendant moved to dismiss the third party action (making him a party to the suit) for lack of supplemental jurisdiction pursuant to 1367 (b). Facts: General contractor (NC) Subcontractor (DE) in state court. Defendant removed to federal court under diversity and then filed a counterclaim against GC alleging negligence. GC then filed a third party action against subcontractor 2 (NC) under state law. Issue: Does the court have jurisdiction over the third party claim? No, there is no supplemental jurisdiction because of the lack of diversity/arising under. This case is distinct from Owen because the defendant removed.

Removal Jurisdiction

- Removal jurisdiction can essentially be thought of as remand jurisdiction. When a defendant wants to remove to federal court, it automatically can (unless the case is filed in the defendant’s home state). A case cannot be remanded to state court if it did not begin there. Relevant statutes: §1441, 1446, 1447. Shamrock says that a counterclaim is irrelevant to removal (plaintiff cannot remove to federal court on the basis of a defendant’s counterclaim-logical considering that a defendant’s claim is not a sufficient basis for federal jurisdiction). A plaintiff’s motion for remand following a removal will be granted when: a) the removal petition was not filed within 30 days of the case

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Gibbs-Yes X

Aldinger-maybeFinley-no

Owen-no

becoming removable; b) the defendant has filed a pleading effectively waiving removal; c) not all the defendants signed the removal petition and d) the sole basis of federal jurisdiction is diversity, and the case is in the state in which the defendant is a domiciliary. Supplemental jurisdiction applies to removed cases in full.

HORIZONTAL CHOICE OF LAW

- When a transaction crosses state lines, which state’s law should apply? The question you must immediately ask in making determinations regarding horizontal choice of law is: is this an instance/problem of substance or procedure? If it’s a procedural issue, the forum follows its own rules. If it is a substantive issue, the forum may follow the rules of another forum.

- In Alabama Railroad, the plaintiff, an employee of the defendant, sued in Alabama District Court for an injury suffered in Mississippi. The court had to determine whether to use Alabama or Mississippi law. Lex loci deictus: the law of the place of the wrong doing (“where’s the blood?”)- the place of the last location where the injury occurred. The vested rights doctrine states that you have the right to recover under the law of the state in which the injury occurred. The court decided to use Alabama law, barring recovery. In Babcock (car accident case where driver and passengers were from different states), the court determined that New York had a more compelling interest in determining collusive liability in regards to its residents. The court articulated this rule: when an issue involves a standard of conduct, it is more likely that it is the law of the place of the tort which will be controlling, but the disposition of other issues must turn on the law of the jurisdiction which has the strongest interest in the resolution of a particular issue presented. (Which state has the stronger interest?) Neumeier: Lex loci delictus can only be rejected when it is evident that the site of the accident is the least of the several factors or influences to which the accident may be attributed.

- Note: lex loci delicti is the first restatement standard. For the Second Restatement, the standard is: if it is a matter of procedure, follow the forum law. If it is a matter of substance, follow the state law. Lex Loci Delicti continues to govern if: a) the injury occurs in injurer’s state and there is no liability or b) the injury occurs in the injured’s state and there is no liability. If action/injury occurs in one state, but all participants are from another state, apply the latter’s law (State’s interests high).

PERSONAL JURISDICTION- Where geographically is the lawsuit going to take place? In Pennoyer v. Neff, the court

distinguishes between “in rem” and “quasi in rem” jurisdiction. There are three ways in which a court can exercise power over the person/thing in a lawsuit: 1) In rem: the court exercises its power to determine the status of property located within its territory and the determination of the court is binding with respect to all possible interest holders in that property, a declaration of the ownership of property that cannot be contravened following the case, determines ownership as against the world. 2) Quasi in rem: the court renders a judgment for or against a person but recovery is limited to the value of property that is within the jurisdiction and thus subject to the court’s authority. The property may be used to satisfy any judgment assessed in the action; asks a court to temporarily hold property until injured party proves entitlement to relief. 3) in personam: the court exercises its

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power to render a judgment for or against a person by virtue of his presence within the state’s territory or his citizenship there.

- A subsequent court does not have to enforce a judgment made by the first court when the first court lacked personal jurisdiction over the defendant.

- For personal jurisdiction, if in the first lawsuit the plaintiff wins on the merits in a forum of his choosing, and in the second lawsuit the plaintiff attempts to make good on the first by going to the place where the defendant has property to collect, the defendant has one chance to litigate whether the rendering court has personal jurisdiction. If he loses, he cannot bring another case on the merits regarding personal jurisdiction). If the defendant does not show up in the first trial, the plaintiff wins by default. When the plaintiff then attempts to enforce this judgment in the defendant’s state, the defendant can rise the issue in their home court but only on jurisdictional issues, not on the merits.

- Pennoyer dictates that a defendant nonresident must be tagged/served in the state where the lawsuit is occurring to prevent the defendant from not knowing he was sued and also to prevent fraud or oppression. Additionally, the only source of federal law that limits a state court’s exercise of personal jurisdiction is due process law. (Based on the idea that state sovereignty is limited by the borders of that state).

- What about corporations? International Shoe: Establishes a “minimum contacts” rule-“ a court may exercise personal jurisdiction over a nonresident (including a corporation) so long as there exists minimum contact, in accords with the standards of fair play and substantial justice to permit state enforcement. (The extent of the defendant’s due process protection depends on the “quality and nature of the activity [creating the contact] in relation to the fair and orderly administration of the laws.”) If the defendant corporation has minimum contacts with a state then the state has personal jurisdiction over that defendant. The concurrence suggests that that you have to also consider the state’s interest in adjudicating the dispute, not just the defendant’s contacts. General jurisdiction is the term used when a defendant has sufficient contact with the forum to warrant asserting jurisdiction over it for all matters (facts of the lawsuit need not be related to the forum). When a defendant has sufficient contact with the forum to warrant asserting jurisdiction over it for matters related to its activity, but not enough for general jurisdiction, it is called specific jurisdiction (lawsuit arises out of contact with the forum- requires statutory authorization, either through a state “long-arm statute*” when in state court or through a federal rule of civil procedure when in federal court). Hague rule: for a state’s substantive law to be selected in a constitutionally permissible manner, that state must have significant contact or a significant aggregation of contacts, creating state interests, such that the choice to use its law is neither arbitrary or fundamentally unfair. (Idea is to prevent a defendant from having to defend himself in a distant forum unless his contacts with the forum are such that “he should reasonably anticipate being haled” into the forum-Woodson).

- McGee expanded state jurisdiction over foreign corporations and other nonresidents based on the idea of the “nationalization of commerce”- mail + state interest deemed sufficient to satisfy the minimum contacts test. Personal availment test: Did the defendant take advantage of/expect protection of state laws? (Foreseeability is not sufficient). Hanson: (rich lady case-she dies, her children arguing about who should get the money, she lived in Florida but her trust was in Delaware-did the trust sufficient contact with Florida?). The court ruled that there are territorial limitations to personal

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jurisdiction that do more than safeguard against inconvenient or distant litigation. Court declined to find sufficient contacts between the trust and Florida, distinguishing the transactions from the mailings in McGee. “The unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum state, as the application of the rule depends on the quality and nature of the defendant’s activity;” the defendant must have “purposefully availed” itself of the privileges of conducting activities within that State, thus invoking the benefits and protections of its laws for personal jurisdiction to apply.

- Worldwide Volkswagen : Strict liability allows purchaser to sue any and everyone in the chain of production. The court determined that there was no purposeful availment (financial benefits from a collateral relation to a forum state insufficient to establish minimum contacts). Nicastro: “Stream of commerce”- when a manufacturer makes a product and sells it, it becomes a product of the stream. Rather than applying the minimum contacts analysis, the court determined that the idea of a stream of commerce cannot supersede due process and that only purposeful contacts with the forum are relevant. Because the plaintiff was unable to prove that the defendant had purposefully availed itself of the market, the court did not have personal jurisdiction over him.

- *State long-arm statutes seek to push the limits of personal jurisdiction and are used to deal with nonresidents. Types: a) those that go to the limits of the Constitution, b) favors naming transactions and determining whether the actions in question fall under those transactions which are governed by the court. Theory of advanced consent: Agreements that any future adjudication will occur in a particular state. These are typically upheld unless contrasted by state law, and do not have to be economically sensitive. Federal long-arm statutes: 4(k) (1) (c) and 4 (k) (2) deal with foreign defendants.

- It is not clear whether the conclusion that a tag (serving the defendant in a state) is a sufficient showing of personal jurisdiction in that state, under International Shoe. In Schaffer, Scalia claimed that a tag allows general jurisdiction. However, the majority determined that, in terms of the relationship between quasi in rem and personal jurisdiction, when the only contact the defendant has with the forum state is the location of property as defined by statute in the forum state, the forum lacks personal jurisdiction unless the minimum contacts test is satisfied. Distinguished by Burnham, which stated that the holding does not compel a conclusion that a state necessarily lacks jurisdiction over an individual unless the litigation arises out of his activities in the state, rather, quasi in rem must satisfy the requirements of International Shoe. Grace determined that air space is considered within the territorial limits of a state. In Calder v. Jones, the court established that lack of contact will not preclude a court from determining a case in which it would ordinarily be able to hear. If a party could reasonably anticipate being brought to court in a state because of their relation to the forum, jurisdiction may be proper (based on the state’s interest). Effects Test: Were the defendant’s actions directed toward the forum state? (Unilateral action away from state is not sufficient to show that it was. Typically applies in tort claims)

VENUE

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- §1391: Venue is separate from jurisdiction. The basis of venue is where the events occurred, where you can serve process, etc. In order to transfer a case, the doctrine of forum non conveniens must apply.

- Venue compels filing in a particular court. Following International Shoe, the focus of venue switched to the convenience of the forum for witnesses. If a plaintiff lays venue improperly the case be dismissed or transferred. State venue statutes determine where to file to lay venue. In removal cases, venue is never an issue initially, as the case simply goes to the federal district court that has geographical jurisdiction over the state court from which it was removed. Thus, DO NOT discuss venue in a removed case. While cases can be transferred with relative ease in federal courts, a state court will not allow an immediate transfer across state lines unless the defendant moves to dismiss for forum non conveniens: the doctrine that an appropriate forum (one that has jurisdiction) may refuse to hear a case if, for the convenience of the litigants and the witnesses, there is another forum in which the case might be brought or should have been brought in the first place. Thus, this is a doctrine that is used when the court has subject matter jurisdiction, personal jurisdiction, and venue is proper but the court still refuses to go forward. Venue can be waived by either party, it is statutory, not constitutional, and is generally approved by courts.

- More on forum non conveniens: Gilbert sets forth the factors that must be weighed and considered when transferring a case, primarily in relation to the private interest of the litigant:

o Relative ease of access to sources of proofo Availability/ability to compel witnesso The cost of obtaining attendance of willing witnesso Administrative difficulties (congested court), local interest in local decisiono Fairness of burdening citizens with jury duty for an unrelated case

The Relationship Between IPJ and Venue: When is venue proper?IPJ

Yes No

Venue yes

no

- Transfer statute: §1404 (a)- a district court may transfer to any other district court with jurisdiction for the sake of convenience. Note: a case can only be transferred to a place in which the original claim could have been brought. In Hoffman, the court rejects the defendant’s contention that a venue objection can change where a case can be brought (“happy court”).

VERTICAL CHOICE OF LAW: Does state or federal law apply?

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The case is filed where the defendant resides

1391 (a): Nicastro in federal court

Primary contact with the state but wrong district

Crazytown-if you don’t have ipj and there’s no proper venue in the state…

- - A federal court sitting in diversity applies substantive state law. With transfer, if the first court is a “happy court,” you use their choice of law rules (in other words, if the transferring court could exercise ipj over a defendant and a plaintiff could properly lay venue there, that court’s law applies, regardless of where the case is ultimately transferred.) [Note: this is because the point of transfer is to provide a new, more convenient venue, not new law.] If the lawsuit is filed or removed in a court that lacks venue or in personam jurisdiction, the law of the state of the receiving court applies, regardless of who initiated the transfer.

- Swift v. Tyson : If a check issuer writes a check to a swindler, who then transfers it to another party, who transfers it to someone else, etc, can the final person make an intermediate party honor that check once the swindler has been discovered? The court determined that federal courts only have to follow the statutory law of the states, and that in the absence of a local statute were allowed to exercise their independent judgment as to what the law is or should be (apply federal common law). Thus, the holdings in Swift were as follow: a federal court-exercising jurisdiction on the grounds of diversity need not apply the unwritten law of the state. The federal court thus assumed a field of “general law” that gave them the power to declare rules of decision within which Congress lacked power to enact statutes. This general law included everything from contractual obligations to tort liability. This idea was completely overturned by Erie (1938), in which the court determined that, except in matters in which federal law is controlling, federal courts sitting in diversity should apply the law of the state, both written and unwritten. The shift to the Erie doctrine was prompted by cases like the taxicab case, in which a company purposefully incorporated in one state to enjoin the competition of another company in another state, sued in federal court under diversity in the latter state, and the federal court, using Swift, relied on the lack of state common law and upheld the first company’s right to exclude competition. Swift also allowed discrimination by noncitizens of a state against citizens of that state and made rights enjoyed under the unwritten “general law” vary according to whether enforcement was sought in the state or in the federal court (thus allowing a noncitizen the privilege of selecting the court), preventing equal protection. Further, noncitizens (including corporations) could avail themselves of the federal rule simply by reincorporating in another state. Thus, the Erie holding mandates “except in matters governed by the Federal Constitution or by acts of Congress, the law to be applied in any case is the law of the state,” regardless of whether the law is statutory or common law. There is no general federal common law. Court uses state law for substantive issues and federal law for procedural issues. The “federal common law” promulgated by the Swift doctrine often amounted to little more than an individual judge’s desires when they were attempting to govern conflicting state rules. (In essence, the Walker test determines that federal rules should not be read narrowly, but interprets the rule there to avoid collision with state law.)

- What are the legal foundations of Erie? (Is it really a constitutional problem, as Justice Brandeis suggests?) Possibilities: 1) Constitutional concerns: Federalism (imbalance of power between national and local governments); separation of powers: idea that Congress can do things that the federal courts cannot, and that federal courts derive their power from Congress, thus any action aside of the Congressional grant of power is necessarily unconstitutional; equal protection. 2) Statutory foundation: §1652 codifies the Erie

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doctrine: the laws of the states are required to apply unless the Constitution, treaties of the U.S., or Acts of Congress apply.; 3) Common law: federal court has prudence (this foundation is of course somewhat circular, since federal common law cannot be the foundation if, as the Erie majority suggests, there is no such thing as federal common law).

- Guaranty Trust presented a new issue: what about when the federal court was sitting in diversity over an issue of equity, not law. Does an equitable remedy in state court have to be available in federal court? Can the court take on a case that would be barred by a state statute of limitations based on the diversity of citizenship? (Is the statute of limitations a substantive or procedural issue?) The court ultimately declares these questions irrelevant, saying that the real question is whether the statutory limitation concerns merely the manner and the means by which a right to recover, as recognized by the state, is enforced, or whether such statutory limitation is a matter of substance-does it significantly affect the result of a litigation for a federal court to disregard a law of a State that would be controlling in an action upon the same claim by same parties in a State court? It identifies the following policy underlying Erie: To ensure that, in a case where a federal court was sitting in diversity, the outcome of the litigation should be substantially the same as it would be if tried in State court; a case in federal court by a nonresident for a transaction that would be in a state court for a resident should not have substantially different results. Thus, diversity allows another tribunal, not another body of law. Thus, Guaranty Trust test: Is the determination of which law to use going to be outcome determinative? (Can the plaintiff win without it). If yes, use state law, if no, use federal law.

- Congress adopted the Rules Enabling Act in an attempt to create uniformity in federal procedure. As a result, there were some direct conflicts between state and federal procedural law, leading to Hanna and Walker. Hanna: Case asked how a defendant has to be served? Court clarified the Twin Aims of Erie : 1) to prevent forum shopping and 2) to avoid inequitable administration of the law. Hanna Test: 1) Is there a valid and applicable federal statute? (Narrowly construe Federal Rules of Civil Procedure). If yes, use federal law. If no 2) Would applying state law prevent either forum shopping or the inequitable administration of the laws? If yes, apply state law, if no, apply federal law. Harlan Concurrence Test: Would applying federal law cause alteration in the primary conduct of the parties? (Would the parties have changed their behavior if they knew a different set of laws applied?) If so, state law prevails, even in the face of a conflicting federal rule.

- Walker also dealt with the issue of how a defendant must be served process. Federal rules are narrowly construed. Conflicted with Hanna, in that it held federal law inapplicable to the issue of service on defendant by narrowly construing federal law. In Stewart, the court was less willing to narrowly construe a Congressional statute (1404 (a)).

STAGES OF A LAWSUIT

- A) Complaint: A plaintiff must make a claim that includes a claim for relief. The level of specificity that is required in such a complaint in order for the plaintiff to have access to discovery varies between a requirement that the complaint state the facts that are going to be proven (code pleading) and a requirement that the complaint give the defendant notice of what they are being sued for. Code pleading thus requires heightened specificity. Once

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the FRCP were adopted in 1938, federal rules were generally interpreted to require notice pleading. Conley standard: unless there was no set of facts that the plaintiff could prove that would allow the plaintiff to get relief, the motion to dismiss is denied-sets up a very broad standard. Note: in notice pleading, the test of the sufficiency of evidence begins at the summary judgment phase (post-discovery- which can be costly and less time efficient)

- B) Motion to Dismiss: A defendant can file a Rule 12 (b) (6) and Rule 8 (a) (2) lay out the standard for a motion to dismiss for failure to state a claim. In doing so, a defendant cannot make any factual claims, instead the court has to take all the allegations of the complaint as true. The court will accept facts as true that lead to a particular inference, not facts that set out a conclusion. Bell-Atlantic (2007) (anti-trust case) and Iqbal (2009) (plaintiff claimed he was held in a maximum security prison because of his religion) focused on code-pleading. In Bell-Atlantic, the court held that there was no heightened requirement of pleading specifics in a complaint, rather that there need only be enough facts to state a claim of relief that is plausible on its face. If the plaintiff’s claim fails to state a claim of relief that nudges their claim across the line from plausible to conceivable, their motion must be dismissed. In Iqbal, the court asked what the defendants did personally to further the discrimination, rather than asking what they failed to oversee. Thus, in Bell-Atlantic the court disregarded the claim of conspiracy because it was a conclusory statement, but considered the allegations of parallel tactics. Under Iqbal: 1) Separate the conclusory statements “mere recitations of elements of the cause of action” from those that can lead to an inference; 2) With the remainder of the allegations (those not rendered conclusory in step one) are taken as true, along with all reasonable inferences in favor of the plaintiff, and then consider the line between plausibility and conceivability. “Nudge the line across the line from merely conceivable/possible to the plausible.” Those that are deemed plausible continue (motion to dismiss denied). In other words, the focus is on the underlying facts rather than the ultimate conclusion.

- C) Injunctions (Rule 65): Preliminary injunctions tend to happen immediately following the filing of a complaint-even before one has proven their entitlement to relief. The following factors are considered by the court when determining whether to grant an injunction: 1) likelihood of success on the merits; 2) balance of harms; 3) affect on public 4) irreparable suffering/harm would occur if granted. Under Alk, irreparable harm occurs when damages would be inadequate to prevent the harm or damages are impracticable.

- D) Discovery (Rule 26): Discovery is used to determine the likelihood of winning, the legitimacy of the evidence/legal issues, eliminate matters in dispute, protect third parties, etc. The discovery process implicates third party interests. Most discovery rulings are considered “harmless error” at the appeals stage (extremely deferential standard of review); and discovery decisions are not normally appealable until the end of trial. Three items must be agreed upon between the attorneys: : 1) date upon which discovery will be closed; 2) date for dispositive motions like summary judgments. (Rule 56 amended for summary judgment to make them by default due at any point 30 days after discovery); 3) trial date. Four basic discovery tools that can be used (typically used in this order): request for production of documents, interrogatories, depositions, and requests for admission. If a party does not comply with discovery rules, a court will sanction them-this may include taking certain facts to be true or monetary fines. The scope of discovery

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is dictated by the complaint. Based on the complaint and Rule 26 (b) (1) this includes anything that is “relevant to the claim or defense of either party.” Such information need not be admissible if it leads to other admissible evidence (discoverable information). Rule 30 (b) (6) allows a plaintiff suing a corporation to list categories of discovery rather than every individually requested document.

- E) Summary Judgment: After discovery, a motion for summary judgment is used to decide whether or not to go to trial. (Very similar to motion to dismiss except it occurs after discovery rather than before.) The shifting burden of summary judgment is described in Celotex: The party moving for summary judgment has a burden with two components: 1) Burden of production, which shifts to the nonmoving party if satisfied by the moving party, to show that the plaintiff cannot meet its burden of proof because there is no evidence of an essential element of their case; 2) Burden of Persuasion: Offer affirmative evidence disproving an element that is claimed (showing that the nonmoving party cannot win on that element) or by showing an absence of evidence in regard to an element. In holding this burden, the moving party asks the court to assume that the nonmoving party has presented the best possible case, and then shows that such a case is still insufficient for their claim to go forward. When the burden of production shifts, the nonmoving must show, through credible evidence, that there are triable issues of fact. The court construes that evidence in the light most favorable to the nonmoving party, engage in all reasonable inferences from the evidence in the same light, and asks itself the following question on the basis of that record of evidence provided by the parties: could any rational jury/trier of fact find for the non-moving party? If so, under Reeves, summary judgment is precluded. If there is no genuine issue as to material fact and if the moving party is entitled to judgment as a matter of law, the judge will grant the summary judgment motion. However: If the moving party is also the party that bears the burden of persuasion in the trial, the party only has to bear the burden of producing evidence, which if unrefuted, will compel a rational trier of fact to find in your favor. On the basis of the evidence you demonstrate, there is only one rational inference-simply bear the burden of producing what you would try to persuade the trier of fact to see at trial. That will then shift the burden to the nonmoving party to produce evidence (burden of production) showing that there is some genuine issue of material fact. If the defendant is unable to do so, there is no need for a trial. If the defendant has tried to do that, the court will consider all the evidences the parties have provided it and ask: construing the evidence in the light most favorable to the non-moving party, making all rational inferences in the light most favorable to that party, is the moving party entitled to win as a matter of law?

- F) If the suing party survives summary judgment litigation, the case moves into a stage of pre-trial orders, in which parties, informed by discovery, the parties list their contentions (or defenses), their witnesses, and the documents to be included. Pre-trial orders take the place of the complaint and answer, so if an issue is raised in the pto that was not raised in the complaint it can be litigated but if it is not raised in the pto it cannot be litigated, even if it was raised in the complaint. Under Scott v. Harris, if the evidence directly contradicts the witness’s testimony on deposition, interrogatory, etc., that issue can be dismissed by the court.

Right to Be Heard

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Property:- The Due Process clause requires that parties have a right to be heard before the

government effects a deprivation of their liberty or property. In Mullane, the court set out the following standard for procedural due process: Notice must be reasonably calculated to inform known parties whose interests are affected by the proceedings. Constructive notice (such as publication in newspapers) is acceptable with regard to missing or unknown parties or for those whose whereabouts could not be ascertained by due diligence. The court defines reasonable notice as what a person, putting themselves in the role of the person to whom notice is due would want (“desirous of actually informing the absentee”).

Old Property

-Relationship of property to dispute- Bond/counter-bond- Risk of loss of property (waste/some other exigent circumstance)

Both

- Decision maker quality (clerk vs. judge)- Personal knowledge (of the person filing the affidavit)- Level of specificity- Nature of proof (medical v. circumstantial; who won the bar fight)- Consequences on the defendant

New Property

- Purpose/nature of statutory scheme (benefits), e.g. disability or welfare

- The term “new property” is used to encompass things the state confers upon its citizens, including things like licenses, social security benefits, etc. The court in Sniadach, a case in which an employee’s wages were garnished, set out a standard for due process stating that notice and a prior hearing were required before garnishment could occur. Goldberg set forth the due process requirements before a government can deprive someone of new property, including an opportunity for an evidentiary hearing. In Matthews, the court set out a third part test for consideration in determining what process is required: 1) private interests effected (interests of each private litigant); 2) the risk of deprivation and the efficacy of the attempts to offset that risk (risk of erroneous decision); 3) Government interest and the burden that the additional procedural requirement would entail. The final prong is slightly altered when the government is not a party to the case. Note: The State always has an interest in ensuring that it has a monopoly on the legitimate use of force.

- In determining whether due process was met/violated, the court considers the quality of the decision maker (clerk v. judge); personal knowledge of the person filing the affidavit, making the claim for action, etc.; level of specificity of that claim/affidavit, etc.

Factors Considered by Court in Adjudicating Due Process (determination of standards for opportunity to be heard before property is seized):

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- Consider these standards in comparison with quasi in rem jurisdiction, in which seizure was allowed before the plaintiff proved entitlement.

Right to Counsel- The fairness/adequate due process of a scheme may involve a question of whether the

person is entitled to help in the proceedings, which may include, but is not limited to, an attorney. As stated in Lassiter, states are not typically required to provide counsel unless a person is in danger of being deprived of their personal liberty. However, in Vitech, a case in which a prisoner was transferred to a mental health facility without his consent, the court determined that a hearing was required along with assistance of some kind (not necessarily legal). Legal counsel is not a requirement because the court wants to avoid adversarial proceedings as much as possible.

- Eldridge Elements: Those factors include: 1) the nature of the private interest that will be affected; 2) the comparative risk of an erroneous deprivation of that interest with and without additional or substitute safeguards; 3) the procedures used and the probable value, if any, of the procedural safeguards, and 4) the government’s interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirements would entail (the nature and magnitude of any countervailing interest in not providing additional or substitute procedural requirements.)

Right to A Jury Trial

- Historically, there was separation between courts in law and courts in equity. Law courts typically had the following remedies: compensatory damages, punitive damages or ejectment, while equity courts, which dealt with the kinds of issues seen in Mottley and Mullane (trust beneficiaries, arbitration, etc.), had remedies like: injunction, disgorgement, restitution, and trust. Rule 2 effectively merged law and equity, though claimants with issues that would traditionally have come before a court in equity are not entitled to jury trials. In making a determination of whether the issue was traditionally one of law or equity, one should look to the type of relief the plaintiff requests. There is a two-part test for determining the law/equity split (set forth in Chauffers): 1) Consider

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the nature of the case: try to analogize the case to the 18th century (because of the 7th Amendment). 2) Consider the remedy.

- Atlas set out a public rights exception to the right to a jury trial in law cases: if Congress sets out a new public right or remedy by statute, it can commit the statute’s enforcement to a tribunal other than a court, such as an administrative agency, in which facts are not found by juries. The government must be suing in its sovereign capacity and must be acting to enforce regulations/sovereign rights. (Granfinanciera specifically rejects claim that bankruptcy is a public rights exception-unless the government is the suing party, the exception does not apply).

- In Markman, the Court made a distinction between fact and law, determining that juries are better at making credibility determinations, while judges are better at interpreting written documents. Cases with questions of fact tend to have stronger arguments for being heard by a jury. A judge can employ an advisory jury at any time. With judges, we require conclusions of law and findings of fact, and judges are required to orally state on the record or write down the bases of their decisions for the sake of transparency, uniformity, and a basis for the appellate court to make their decision in reviewing that fact-finding, though there is no such option in jury trials. (Based on Rule 52). The hope is that the action of writing it down/articulating it will provide better quality decisions because they will be organized and each issue will be thought through. This becomes important in later discussions of preclusion.

- Jury Instructions: Typically rendered orally; Each party proposes instructions to court at the appropriate time, if the judge omits an instruction or includes one that you oppose, you should object. Failure to object has immense consequences of the standard of review on the appellate level. In Kennedy, the Court determined that if a party raises an instruction that isn’t exactly correct but raises appropriate issues, the judge has a duty to correct the problem and give the correct instruction. A party must object to jury instructions if they dislike them, otherwise the instructions that are given are not subject to appellate review. If jury instructions come up on appeal, harmless error analysis is applied to them, often before the court makes a determination based on the merits.

STANDARDS OF REVIEW

Appellate Review Standards: (if there is an appeal, what standards of review will the court use to evaluate the lower court’s decision?)- in order of increasing deference.

- 1) De novo: “anew,” no deference is given to the trial court’s decision, appellate court considers it as if it were sitting in the shoes of the trial court. These issues include issues of law, statutory interpretation, etc.

- 2) Abuse of discretion: there is a lot of discretion given to trial court’s determination; appellate court considers whether the decision with which they disagree is discretionary. If it is, unless there is some kind of gross error of reasoning, the court will uphold it. This standard applies to all discovery rulings;

- 3) Clear error: applied to judicial fact-finding under Rule 52. It cannot be just any error, but must clear. (Circular). “Definite and firm conviction that a mistake has been made.” A fair amount of deference is given here. Factual findings are reviewed for clear error as are evidentiary conclusions.

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- 4) Plain error: error so obvious that the judge is supposed to notice it on his/her own without any help from the parties. Applies in an evidentiary problem or a jury trial instruction when there is no objection. Extremely deferential.

Judgment as a Matter Of Law (JAMOL): - Not an appellate review standard, this standard occurs in the midst of trial when a party

requests a decision based on partial evidence because no rational jury could find otherwise than in their favor or it may be applied after a jury has entered a verdict based on a claim that only an irrational jury could have reached that conclusion. (Thus, a party can move for a review of this type either pre-verdict or post-verdict). This type of judgment cannot turn on a matter of credibility.

- It has the same standard as a summary judgment (could a rational jury find for the nonmoving party if the evidence is construed in the light most favorable to the nonmoving party), except it applies to the trial record as opposed to the pre-trial record. You need to make this type of motion twice, pre and post verdict, for the sake of reserving the issue for appeal. The pre-verdict motion is typically made at the close of the evidence, and post-trial motion is made after the jury has rendered its verdict (up to 24 days after, according to Rule 6 (b)). Note: None of this applies if a judge is the fact-finder. The court has the option of granting a party another chance to produce evidence on a given element/correct some problem in its case when the motion is made pre-verdict. According to Rule 50, when the judge sends evidence to jury, he is not commenting on the sufficiency of the evidence, rather he defers on that issue until after the trial, hoping that the jury will make the “right” choice without his intervention because the appellate court is going to apply the same reasonable jury standard. An appellant court determines whether the appropriate motions/rulings were made applying the de novo standard to the judge (and granting extraordinary deference to the jury). A party can make a motion for a JAMOL post-trial (Rule 59). A post-verdict motion was previously called a judgment n.o.v., and was based on credibility determinations.

Finality- There is a limited amount of investment that we as a society can make in the resolution of

a single dispute, thus there has to be a limit on how long a party can continue litigation. For the purpose of finality (a party can only appeal from a final judgment ending litigation on the merits), a jury verdict is not considered a final judgment.

- Under Rule 59, there are several ways to get a new trial: 1) Trial Judge Error: if you can convince the judge that they made a mistake in running the trial, e.g. admitted evidence that is inadmissible, gave the wrong jury instruction, etc., a new trial may be granted. Note: A denial of a new trial is appealable, a grant of a new trial is not. 2) Weight: If the verdict is against the great weight of the evidence, a new trial can be granted. 3) Verdict will result in a miscarriage of justice

- A remittitur is used to describe an order denying the defendant’s application for a new trial on condition that the plaintiff consents to a specified reduction in the jury’s award. An additur is used to describe an order denying the plaintiff’s application for a new trial on condition that the defendant consents to a specified increase in the jury’s award. Remittiturs are recognized almost everywhere while additurs are outlawed by most states.

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The federal court has determined that under the 7th Amendment, remittiturs are allowed but additurs are not.

- A party can seek relief from judgment under Rule 60, but it is an extremely high standard and is uncommonly used.

APPELLATE JURISDICTION- For a federal appellate court to have jurisdiction, the trial court must have jurisdiction and

the appellant court must have appellate jurisdiction. Appellate jurisdiction can be raised by either party at any time or sua sponte (by the court itself).

- Appellate jurisdiction is always available when the issue of the case would materially advance the resolution.

- Questions of appellate jurisdiction can be brought at any time. Appellate jurisdiction has the following bases: 1) Final Order Rule: §1291: appeals are only allowed on final judgments. In order for there to be a final order on all the elements of a claim (defined here as a set of facts plus a theory of relief). Rule 54 (b) requires that a trial judge must rule that there is no just reason for delay in finalizing the ruling (the claim must be independent of other claims in the litigation). The merits of the claim must be ruled upon in order for the judgment to be final. The standard of review here is abuse of discretion. This rule is based on the belief that most judgments are correct, that those that are wrong are typically harmless and will not affect the outcome of litigation, and for the sake of efficiency (to prevent lawsuits being drawn out for a long time).

Rule 1291

- Collateral Order Rule: If there is an issue at the beginning of a case that would require the plaintiff to buy a bond to cover the defendant’s costs if the plaintiff loses, the requirement of the bond would not be reviewable at the end, an order can be granted then. Rule: Issue is separable from the merits (order must be collateral to the merits of the case), effectively unreviewable at the end of the case; and final with respect to the issue, an order can be issued before the final judgment. (Also called the) Cohen Exception: If the rights conferred by a statute would be lost if they waited until the final order to review it, it can be reviewed before the final judgment. Expense is not enough to warrant this exception. Thus, if an issue is sufficiently separate from the merits, reasonably important-effectively unreviewable, decision you’re appealing from must be reasonably final and not discretionary (this element is not a part of the formal rule), it can be decided. Must ask: is the right for which the moving party is requesting protection a right of litigation or judgment? If it is a right of litigation, the decision is unreviewable until final judgment. If it is one of judgment, it is reviewable. (Cohen acts as an early Erie test)

- Double Discretion/Interlocutory Appeal: Section 1292 (b): Express finding from a judge in writing showing that an interlocutory appeal would materially effect the litigation. The trial judge is supposed to do say something is appealable when there is a controlling question of law and grounds for substantial disagreement and materially advances the ultimate termination of the litigation. There are 10 days to do so. Have to ordinarily file a notice of appeal in trial court in 30 days. Appellate court does not have to agree to hear the appeal just because of the trial court’s determination. “Passing on

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Defense”: articulated in Atlantic City (suppliers of an electric company with a monopoly conspired to fix prices, in response to an allegation of conspiracy, they refused to turn over discovery on the basis that the company itself wasn’t suffering from any damage because they were able to pass it on to their customers). Note: there is no right to appeal a refusal to rule on an injunction motion.

- Issuance of Writs: In LaBuy (case where district judge kept transferring cases he didn’t want to hear-note: transfers are not final orders), the court ruled that writs should be used/issued only in extreme circumstances-when there is an immediate need for entitlement to relief due to a present harm that cannot be reviewed later. To successfully obtain a writ, you must show that you are likely to prevail on the merits. Elements needed for a writ: there must be a strong reason that involves an irreparable harm (can’t be repaired at the end of litigation), there must be clear entitlement to the relief (likelihood of winning later), and it must be an unusual case (want to limit the number of consequent petitions), may also be a supervisory element-to prevent a judge from continuing to do something that the court does not look favorably on.

MULTIPARTY LITIGATION (see slides) (Under what circumstances can parties be added-either through their request or the request of the parties?) To add parties, there must be a federal rule allowing you to do so and there has to be a basis of subject matter jurisdiction.

- Under Rule 13 there are two types of counterclaims: 1) Compulsory: must bring them at this time, if you don’t and the case goes to judgment, there is no other avenue to bring them. A counterclaim is compulsory when it comes out of the same transaction or occurrence under Rule 13 (a) or the same series of transactions or occurrences (similar to supplemental jurisdiction: case or controversy 1367). May be a way to combat declaratory judgment; 2) Permissive: you could bring them, if you don’t, there is a chance to litigate them later. Whether a counterclaim is permissive or compulsory depends on whether they arise from the same claim (meaning here: the same transaction or occurrence or series of transactions or occurrences). In Heyward (Navy and Stelma contracts; general contractor arguing that the entire verdict has to be vacated because they are not separated in the verdict): Court determined that the claims came from the same common nucleus of operative fact, reading “same transaction or occurrence broadly,” with the result that to not be considered in the same transaction or occurrence, the two things have to be really unrelated.

- Permissive joinder: In order for two or more plaintiffs to join together in a suit, they must demonstrate that there is a common issue or fact. (Rule 20 (a) (b). Rule 1367 (b) (supplemental jurisdiction) requires care when plaintiffs attempt to cross claim in federal court when the jurisdiction is based on diversity. However, a defendant can bring any claim against another defendant once there is an initial claim between parties.

- Intervention: Rule 24: In order to intervene as a plaintiff or defendant, you must file a proposed pleading, which does not include a motion to dismiss or a motion for summary judgment. There are two types of intervention: 1)

- : Elements: if the party claims an interest, related to the property or transaction that is subject to the occurrence, whose interest will be impaired or impeded unless they are allowed to adequately represent that interest. Smuck (case of parents in D.C. wanting to

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intervene on a case between the school Board and poor black parents when the school Board refused to intervene). 2) Permissive. Determination of whether a party should be allowed to intervene requires consideration of the incentives of each party (in Smuck, the school Board had an incentive not to appeal-it was the only way they could desegregate without backlash). (There is no such thing as a compulsory intervention-one that would require plaintiffs to determine what other parties could possibly be interested so that they could serve them.)

Preclusion: For preclusion to be a factor, there must be two lawsuits-an appeal is not considered a separate lawsuit.

Elements of Claim and Issue Preclusion:

Claim Preclusion Elements

- Same “claim”-broad, transaction or occurrence

- Judgment on Suit #1 is a) final-it’s okay if the case is on appeal b) “on the merits”

- Same parties (privity-which includes substantial control)

Issue Preclusion Elements

- Actually litigated- Necessary to Decision- Same Issue- Same Parties (?)

- Claim Preclusion: (Using the term “claim” broadly to mean transaction or occurrence). The purpose of claim preclusion is to encourage parties to bring as many of their theories of relief as possible in one case. A defendant never has to be worried about being claim precluded. Once a lawsuit is finished (trial judgment sufficiently final), a party can preclude another party from bringing a claim or issue in another case. While claim preclusion only runs against people who have or would assert claims (only against people who could have been plaintiffs or defendants), issue preclusion can include anyone who tries to bring the same issue. Most important case to remember here is Gonzalez, the class action where the real estate agents tried to sell swampland, and there were two different classes of plaintiffs-the Gonzalez plaintiffs and the Rodriguez plaintiffs. The test for determining whether a claim arises from the same transaction or occurrence is whether they had the same nucleus of common operative fact. In order for parties to be considered in privity, they have to be virtually identical. The Jones case (repossessed car after he defaulted on payments following a lawsuit for due payments-claimed acceleration clause required them to bring the entire suit at one time) brings up the issue of whether a default judgment against a party who failed to show up is sufficiently “on the merits” for preclusion. The court determined that it is sufficient for claim preclusion, but is not considered “actually litigated” for issue preclusion. Judgments that are not

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considered “on the merits” are: dismissal for lack of subject matter jurisdiction, dismissal for lack of personal jurisdiction, venue-dismissal on any of those grounds do not include an attachment of claim preclusion, although issue preclusion may apply (in terms of jurisdiction and venue). Note: a claim does not have to be actually asserted in lawsuit 1 to be precluded in lawsuit 2: it is enough that the claim could have been brought.

- Issue Preclusion: While the term “claim” is pretty malleable in terms of claim preclusion, issue tends to be a little more static. As demonstrated in Cromwell, the requirements of issue preclusion that the issue be “actually litigated” and the “same issue” are closely related. The “necessary to decision” prong is articulated in the Rio v. Davis case (car pileup case): Court determined that the third party’s negligence was immaterial to the outcome of the case and thus not issue precluded. The following elements are taken into consideration with this prong: a) would the defense have been vigorous in the first suit; b) did the party have the incentive to fight the claim; c) was the jury rational. This prong is designed to ensure quality-don’t want to have to worry about the quality of decisions to issues that are immaterial to the outcome of the case. In Russell, the Court held that a general verdict will generally not be sufficient for issue preclusion, because it does not detail which issues were decided/material. The “same parties” element is a question because we don’t always require mutuality (same parties) to prevent litigation of a subsequent lawsuit. Note: “collateral estoppel” can be used in place of “issue preclusion” for the sake of clarity, e.g. “defendant was estopped from claiming xyz” versus “defendant was issue precluded.”

Mutuality: (same parties): This doctrine states that to bar a party from relitigating an issue determined against that party in an earlier action, both parties must have been in privity with one another in the earlier proceeding. Parklane case: Shareholders file claim against company, then the SEC does as well, court determined that the shareholders can preclude the company from relitigating those issues, though ordinarily they would not allow such offensive collateral estoppel. (Offensive collateral estoppel typically allowed only when the parties are in privity). The court rejects offensive collateral estoppel because it involves a “wait and see” tactic-if the plaintiff in the first party wins, you can preclude the defendant and automatically win, if they lose, you can change your strategy and litigate a second case-this directly contradicts the goals of claim preclusion because it discourages joinder, failing to promote judicial economy and fairness. Exception: Offensive collateral estoppel is allowed when the second party attempted to join the first lawsuit but was unable to. Defensive collateral estoppel, however, encourages plaintiffs to bring all their claims at one time. Thus, the incentive structure is important.

Types of Collateral Estoppel:

Defensive Collateral Estoppel

L1: P1 D1, P1 losesL2: P1 D2, same issue (P estopped from disputing that issue)

Offensive Collateral Estoppel

L1: P1 D1, P1 winsL2: P2 D1 same issue (D not typically estopped)

Intersystem Preclusion

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- Important Terms: The rendering court is the court in the first lawsuit, i.e. the court that renders the initial decision. The subsequent court is any court in which the second lawsuit is filed. Interesting questions come up when the rendering court and the subsequent court are in different states or different levels (state vs. federal).

- In Semtek, the Court determined that preclusion is procedural under Erie (and in that case, federal rules necessarily applied). However, mere paragraphs later, the court determines that preclusion is in fact a substantive issue. The holding in Semtek suggests that in cases where the court is sitting in diversity, the preclusion laws of the state in which the court is sitting should govern. A subsequent court must give at least as much preclusive effect as a rendering court to a rendering court’s judgment, but it is unclear whether a subsequent court can give more preclusive effect than a rendering court. A rendering court can limit the preclusive effect of its decisions.

Whose preclusive law governs?Subsequent Court

State Court Federal Court

State Court

Federal

Rendering Court

In summary: the source of law that governs the preclusive effect depends on the identity of the rendering and subsequent courts. The subsequent court has to give at least as much preclusive effect as the rendering court, although it is unclear whether it is allowed to give more.

CLASS ACTIONS

- Rule 23 governs class action lawsuits. In order for a case to be certified as a class action it must meet the following four criteria: numerosity (the class must be so numerous that joinder of all members is impracticable), commonality (must show that the substantial questions of law or fact are common to the class), typicality (the claims or defenses of the representative parties are typical of the claims or defenses of the class), and adequacy of representation (the representative parties will fairly and adequately protect the interests of the class); and fall under one of the subcategories of Rule 23 B.

- A B1 claim used when disallowing the class would be likely to result in inconsistent verdicts or when separate lawsuits could potentially preclude parties from arguing an issue when they have never actually had their day in court. Such a worry could come into play with things like bankruptcy cases where members who find out early can receive

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Full Faith/Credit Clause: Article 4/§1738

§1738; if it is an issue with exclusively federal jurisdiction, no clam preclusion-maybe issue preclusion

Federal common law it (Erie). Semtek

Federal common law

damages but later members are unable to do so because of the poor defendant. The policy rationale behind this category is that the court is worried about effectively adjudicating issues of class members whose interests are involved. To avoid this issue, the rule attempts to create a class where damages are equal. Thus, subdivision A looks for the possibility of prejudice to the non-class party while B seeks to protect members of the class from prejudice. B2 categorization is appropriate when the relief sought is injunctive or declaratory relief. Conduct the defendant is doing that could affect the entire class of people will usually result in an injunction. Members of the B2 class do not have to be notified (they may be but do not have to be) and similarly do not have to be given the option to opt out. B3 certification is typically used in cases where monetary damages are sought. (Such classes are called “damages classes.” In order to certify a class under B3, the parties must show that the class action is superior to other available methods for fairly and efficiently adjudicating the controversy and that the questions of law or fact common to the class members predominate over any questions affecting only individual members (thus the predominance standard of B3 essentially swallows the commonality requirement). Members of the B3 class must be notified of their involvement in the class and must be given the opportunity to opt out of participation in the litigation. The notice standard for B3 classes is: “best notice practicable including individual notice to all members who can be identified through reasonable effort.”

- Settlements: In order to settle in a class action, as in Amchem, there must be a fairness hearing to determine whether the settlement is fair, reasonable, and adequate. All class members who would be bound by the settlement (precluded from raising the claim/issue in subsequent cases) must be given notice-or there must be a reasonable attempt to give such notice.

- Class action and discovery: In class actions, discovery immediately follows the filing of a complaint requesting class certification. Merits are thus adjudicated twice-once to certify the class, once in trial.

- In Shutts (the case where the plaintiffs were suing for delayed royalty payments, filed in Kansas although 95% of the class made the contracts in NY, TX, and OK), the court determined that you can exercise personal jurisdiction over class plaintiffs, although there are constitutional limits in terms of whose law is applied (horizontal choice of law). You can exercise jurisdiction over the claim of an absent class plaintiff, even though that plaintiff does not possess the minimum contacts with the forum that would be required if he were a defendant. The court dealt with the issue of commonality in Falcon (employee claimed that he was not promoted because he was of Mexican-American descent and attempted to include others in the class who had been discriminated against in hiring practices-court rejected that argument). According to Exxon, each individual member of the class does not have to meet the amount in controversy requirement, but at least one of the class members must. Exxon raises interesting issues in regard to supplemental jurisdiction. The important language to consider is in §1332, particularly the “person made party” language-notably, Rule 23 is not included in the list of rules under which you cannot use supplemental jurisdiction-plaintiffs are not ordinarily considered to be “person made parties” while defendants are. In Exxon, the court also rejects the contamination theory: the idea that if a claim or party falls outside the court’s original jurisdiction it somehow contaminates every other claim in the complaint, depriving the court of original jurisdiction over any of the claims.

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- In Beacon Theatres, the court determined that in a case where both equity and law claims could be raised, and one claim is likely to preclude the other, the law claim should be tried before a jury first, to prevent a party being precluded from bringing issues before a jury.

- Shady Grove : Conflict between Federal Rule 23 and New York law §901 regarding class actions (New York law prohibited the filing of class actions in cases where the remedy was derived from penalties in statutes). Thus it was primarily a vertical choice of law question, in which the court was trying to determine which law would properly dictate whether or not the class was allowed to be certified. Scalia applies the Hanna test, asking first, whether there is a valid and applicable federal law. The rule is obviously applicable, but in order to make a determination of validity the court has to look to the Rules Enabling Act (which states that a federal rule which seeks to modify, abridge, or enlarge a substantive right cannot stand). Ginsberg argues that Hanna should be understood under Walker, by narrowly interpreting federal rules with sensitivity to state policies in mind, thus articulating a fourth Erie “test”: Take Walker seriously! Narrowly interpret federal rules to avoid conflict with State law- to avoid invalidating a federal rule, narrowly interpret it.

- (Turner v. Rogers deals with questions of access to justice-not super important beyond remembering that the court favored certain dispositive tests instead of favoring the idea of “civil Gideon”-mandating counsel in civil cases in which personal liberty or a substantive right is at stake).

- Anytime you see “long arm statute,” think that it answers the following questions: 1) Does the statute authorize the exercise of personal jurisdiction under the circumstances of the case? 2) If so, is it constitutional under the due process clause to do so?*

o If a state simply follows the “limits of the Constitution,” if the court has the constitutional power to assert jurisdiction, it has the statutory power as well.

o If it is limited (restricted to enumerated categories of cases), it may go beyond the minimum contacts requirement. All long arm statutes that base personal jurisdiction on specific enumerated acts require that the claim sued upon arise out of the act itself.

Remember, the due process clause imposes fundamental limitations on the power of state courts to exercise personal jurisdiction over defendants in civil suits. Under the clause, states may only assert jurisdiction over defendants who have:

o established a significant relationship to the forum state through domicile,o in-state presence, o continuous and substantial business within that state, o consent to suit in that state, or o minimum contacts with the state that gave rise to the claim in the suit.

Questions for office hours:- Exxon handout: In thinking about situations in regard to persons made parties, what

happens in a situation where a plaintiff is brought in through cross or counter claim? - Rules Deciding Act and Rules Enabling Act (in relation to Erie and its progeny, do we

just need to understand the acts limit the federal rules in terms of their

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application/interpretation of state statutes?)- rule is not supposed to enlarge, modify, abridge a substantive right-Hanna majority (applicable <- Walker; a statute can be rendered invalid if its unconst.; FRCP- ok so validity is the highest consideration…; no federal court has ever held a rule invalid instead make it narrower so that it doesn’t apply because if it did it would be valid.

- Confused about the tolling issue in Walker…?- Where does Aldinger fit in the supplemental jurisdiction chart?- General confusion about 1292 (1): how to understand double discretion and the collateral

order rule in consideration of Cohen. Two separate bases of appellate jurisdiction, 1292: District court has to make explicit findings (issue about which there could be substantial difference in opinion, and appellate decision would materially advance the case) in writing and then the circuit court has to give permission to appeal. Cohen exception: district court doesn’t have to do anything, just issue: collateral to the merits, has to be final with respect to that subject matter, issue has to be effectively unreviewable.

- In terms of subject matter jurisdiction, what is the significance of the idea of broadly/narrowing construing the Constitution/Congressional statutes?

- Who makes the law on the issue of intersystem preclusion?- Public rights exception-only applies with government? Government has to be a party and

has to be a regulator- Aldinger/Finley overruled by supplemental jurisdiction rule. - Jones v. Flowers: duty to follow-up (certified mail versus open mail)- Hoffman can only be transferred to a place where venue could have been proper; happy if

there is ipjurisdiction and subject jurisdiction Berman. - Clean-up rule (predated merger of law and equity): if a set of facts including both legal

and equitable claims, you went to equity, which would allow you to litigate everything-Morese not out yet.

- 23 (f) as a response to Cooper; Rule 60/Title a circuit split is not enough; - See overview in CivPro binder

Ginsberg in Shady Grove: to prevent them from doing deterrent/excessive liability on defendant. (Re-read Semtek, Exxon, Shady Grove-insofar as Scalia describes Erie).

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